Vanity milestones

Eric Ries uses the phrase “vanity metrics” to refer to metrics that founders cite to demonstrate progress but that are actually false signals. A related concept is “vanity milestones”: achievements that are more about making you feel good than helping your company. Vanity milestones include:

– Raising money from famous people/firms who aren’t really going to help your company (e.g. Hollywood celebrities).

– Partnerships with brand name organizations that aren’t really going to help your company.

– Getting press (e.g top lists) that focuses on founders and not your company.

– Almost all tech press (unless your product targets developers or tech companies).

This doesn’t mean it’s bad to hit vanity milestones. Good companies hit lots of vanity milestones along the way, and sometimes they can be a morale boost for employees. What is worrisome is when founders equate vanity milestones with success. The attention will go away very quickly if your company fails.

Growth curves of startups

Pick whatever metric you want for gauging the success of a particular startup: profits, revenues, pageviews, etc. A graph I’d love to see is those metrics, graphed over time, for a wide variety of startups. From my experience, you’d be surprised how often those graphs show sudden growth. Something happens in the world (an “exogenous shock”) and the startup suddenly takes off.

I remember first observing this when I worked at Bessemer. For example, there was a startup that supplied services to video websites. For years, the company soldiered along, barely growing. Then, suddenly, YouTube blew up and this company took off along with it.

As a founder, these exogenous shocks are out of your control, but you can 1) understand what exogenous shocks you depend on, 2) try to guess when those shocks will hit, 3) manage your runway so you survive long enough for them to hit.